Category: degrowth

One thing you learn when leaving the protected world of academia for a position in industry is to differentiate between relevant and irrelevant information. An older colleague at ABB used to interrupt my detailed explanations with a simple question: “Do I need to know that?”. I was rather annoyed at first, but I soon realized that he was right most of the time. Scientists always try to dig deeper to learn as much as possible about a particular problem. Engineers, on the other hand, have deadlines. To move ahead with a project, one needs to filter out the facts relevant to decision making. Our understanding must be “good enough”, but not much better than that. Scientists often have a problem with this, making them poor decision makers.

For almost over 30 years, politicians have successfully avoided any meaningful action to limit global warming. To accomplish this, they employed every trick in the book. One of the more successful ones was to shift the responsibility to scientists. This was a brilliant trap, which made scientists feel important and almost ensured inaction, as politicians could pretend to be waiting for the next scientific report when accused of inaction. The reports, written by large committees of scientists and keenly monitored by politicians with their fingers on the funding button, were carefully purged of any controversial content and presented in a language intended to make people fall asleep rather than to wake up.

The real harm, however, was done by economists, such as William Nordhaus, who tried to balance the cost of climate protection against the deleterious effects of climate change. Such a calculation is clearly meaningless, as it is not possible to predict any of these quantities with sufficiently high accuracy. We do not know how technology is going to develop and therefore cannot predict the costs of climate protection far into the future. Just look at the rapid fall in the price of photovoltaics during the last decade, which few people expected.

Predicting the economic costs of global warming is even more difficult because it requires detailed knowledge of local weather changes rather than global averages. A farmer does not only care about average temperatures and precipitation, but also wants to know about the distribution over the year. Funnily enough, the same people who like to criticize climate models for being inaccurate, seem convinced that they are good enough to prove the harmlessness of climate change.

The economic argument for a measured response to climate change is therefore based on calculating the difference between two extremely uncertain quantities, rendering the result sufficiently inaccurate to be irrelevant. Furthermore, it is deeply immoral, as it forces future generations to accept decisions made for them by us. To make matters worse, economists apply the trick of discounting, thereby assuming future generations to be much richer than we are and therefore more able to cope with environmental disasters. Assuming an economic growth of 5.5%, they conclude that it is better for your children to lose $10’000 in 30 years than for you to spend $2’000 today. I am not sure your children would agree.

Leadership can best be defined as the ability to make decisions based on incomplete information. The simple truth is that we need to keep as much fossil fuel as possible in the ground, without wrecking the economy. We also know that the best way to accomplish this is through a global carbon tax. It is left as an exercise for the interested reader to explain why neither emissions trading, geoengineering, nor carbon capture change the validity of this statement.

There are only two important decisions to be made:

How high should the carbon tax be?

How do we distribute the revenue from the tax?

Fortunately, we do not have to answer the first question if we use a feedback loop. Rather than trying to predict the price in advance, we can use the carbon tax as a control parameter, just like a thermostat uses the actual room temperature to determine whether it should heat or not. If carbon emissions sink too slowly, the price needs to increase. If the damage to the economy is too large, we need to reduce the price.

Thus, we are left with the one question upon which the fate of humanity hinges: global inequality. We cannot introduce a single global carbon tax today, as it would be too high for poor countries and too low for rich countries. However, different taxes in different countries will not work, because it leads to leakage effects. Companies would simply outsource activities to countries with low carbon prices.

There seems to be only one reasonable solution to this problem. The revenue from a global carbon tax must be distributed in an equitable manner, with every human being receiving the same amount. This is the central idea behind Global Climate Compensation. The rising tide lifts all boats, but we first need to make sure that everyone has a boat.

We are well past the point where new research and global political conferences can have an impact. The only thing that can save us now is the immediate introduction of a global carbon tax. Arguing about the distribution of the costs makes about as much sense as negotiating the price of water when your house is on fire.

A society depending on fossil fuel has no future, because it destroys the atmosphere and will eventually run out of energy. The entire scientific debate on climate change has focused on whether this will happen 20 years earlier or later, which is not even very relevant. The real question is whether we want to write off our children as collateral damage related to our fossil fuel addiction. If not, we had better start working.

A group of people have come together to launch an initiative for Global Climate Compensation. We need everyone to make it happen. Please contact me if you want to join.

It’s not enough that we do our best; sometimes we have to do what’s required.

What the corona crisis teaches us about solving the climate crisis

I am delighted to be able to give a public lecture again. This time it will be online and hosted by WWF in Basel.

The title is borrowed from Richard Feynman and I will explain why I believe it is highly relevant.

Abstract

With media’s attention almost entirely devoted to the corona crisis, it is easy to forget that climate change represents a much larger threat to humanity and that we are rapidly running out of time to fix the problem. We should therefore try to learn as much as possible from the current situation, which offers important insights into the politics of crisis management. The most important lesson is probably that “nature cannot be fooled”. Real threats cannot be countered with wishful thinking or political rhetoric.

The largest obstacle to fixing the climate crisis is in our heads. For almost 30 years, we have been arguing over minimal changes to society, hoping that these would miraculously suffice to solve the greatest challenge in human history. Political convenience was more important than solid facts. The corona crisis gives us an opportunity to change this. In my presentation, I will try to be more ambitious and present a plan to solve the climate crisis.

I have been invited to organize a conference track on carbon pricing at the the 7th RME Research Conference (Responsible Management Education) on October 18-21 2020 at the FHGR in Chur. We are looking for contributions that address the incompatibility of economic growth and climate protection:

The problem with climate change is not that renewable energy is too expensive, but that fossil fuel is too cheap. With current coal prices, the amount of coal required to exhaust the carbon budget of 330 Gt costs less than 7 trillion USD (< 10% of global GPD), or less than 1000 USD per capita. As science and technology are not going to make fossil fuel more expensive, it follows that solving the climate crisis is a political problem, which can only be solved through the introduction of significant global carbon pricing. Most likely, the required price level will be high enough to send the world economy into a long-lasting recession. This track will consider possible mechanisms for the introduction of global carbon pricing and its consequences on employment, technological development, quality of life and economic growth.

Please feel free to submit your contribution to this important topic using this link. The deadline for submissions is May 31, 2020. You can also contact me directly if you have any questions.

Ladies and Gentlemen! I am delighted to present my latest invention: the OctoWheelBarrow. Don’t laugh – it is a lot better than the previous version, which used a square wheel.

A wheelbarrow with an octagonal wheel

Assume that we lived in a society where the state religion bans the use of round shapes in engineering. There would be two kinds of engineers: The opportunists and careerists would make a living from designing octagonal wheels and the decent ones would get politically involved and try to remove the ban. To paraphrase George Bernard Shaw:

The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.

For this reason, I cannot attend innovation seminars anymore. To begin with, it is kind of surreal to have a person on stage telling people to think independently. Monty Python made fun of this in “Life of Brian”, where they had a huge crowd of people shouting “We are all different!” in unison. A creative person does not need to be told what to think.

Even worse, nobody attending such seminars is prepared to think outside the box of capitalism. There is an unwritten agreement that the purpose of all human activity is to generate ROI. If someone comes up with an idea to sell more guns, alcohol, or junk food, it is automatically considered a good thing. The purpose of a vending machine for soft drinks is to sell as many of those as possible, even if they are unhealthy. In order to accomplish this, engineers today use cameras with face recognition in order to display the gender- and age-appropriate ads. It is called progress.

My main point is not to criticize our current economic system. I just want to point out that we have all been brainwashed into believing that no alternatives are possible. Children are taught how to compute compound interest, but they do not learn where the money comes from. This way, innovation in our society is limited to technology. All other forms are banned. Ideas without business models are dead on arrival. That is not very innovative.

Here is a simple question I like to ask my students and attendees of my public lectures:

A gold digger departs into the mountains and finds a huge goldnugget. Upon returning to civilization, he is considered rich. Why?

Even though there is a simple and obvious answer to this question, many people do not get it.(*)

Our collective lack of imagination gets almost unbearable when talking about sustainability. We start by excluding the 99.9% of solutions which would be good for the environment but not have a business model and focus on the 0.1% of solutions that allow someone to get rich. That is no way to conduct a brainstorming. (Note: the figures quoted are used for rhetorical effect. They should not be interpreted literally)

Is there are conflict between economic growth and sustainability? I believe it is obvious because we are ultimately interested in consuming things. We do not work to earn money but to acquire purchasing power. Money allows us to have buy a big house with a huge garden, to get a nice car, and to travel to interesting places. In short, it allows us to consume non-renewable resources. If we were not allowed to use our money, we probably would not work that hard.

Anyway, I am not the only one of this opinion (see below). I would be happy to be proven wrong but currently I am more interested in finding out the truth. That will be the topic of a future blog post.